Wall Street veered into negative territory early Friday after several big banks issued mixed first-quarter earnings reports and trimmed guidance on the assumption that the Federal Reserve would cut interest rates.
Futures for the S&P 500 slipped less than 0.3% before the bell, while futures for the Dow Jones Industrial Average fell 0.2%.
JPMorgan Chase shares fell 2.5% after it reported a modest 6% rise in first-quarter profits. However, the bank gave a lower-than-expected forecast for its net interest income for the full year, largely reflecting the bank’s expectation that the Fed will cut interest rates later this year.
Wells Fargo shares bounced between small gains and losses after it beat Wall Street profit targets, according to analysts surveyed by FactSet, even as earnings declined from the same period a year ago. It was Wells’ first earnings report since the Biden administration eased some of the restrictions on the bank after a series of scandals. Its shares were down less than 1% an hour before markets opened.
Citigroup shares rose 1.2% after it beat Wall Street analysts’ profit targets.
With the most recent earnings season just getting started, the main question dominating Wall Street has been if and when the Federal Reserve will deliver the cuts to interest rates that traders are craving. After coming into the year forecasting at least six cuts to rates, traders have since drastically scaled back their expectations.
A string of hotter – than – expected reports on inflation and the economy has raised fears that last year’s progress on inflation has stalled. Many traders are now expecting just two cuts in 2024, with some discussing the possibility of zero.
In Europe at midday, London’s FTSE 100 climbed 1.5% after a report showed that the country’s gross domestic product increased by 0.1% in February.
Germany’s DAX advanced 0.9% after data showed the country’s inflation rate eased to 2.3% in March, the lowest level since June 2021.
The CAC 40 in Paris gained 0.8% to 8,105.14.
In Asian trading, the Nikkei 225 index closed 0.2% higher at 39,523.55, with the dollar standing at 153.28 Japanese yen, nearly matching the 34-year high of 153.32 yen that it reached on Wednesday.
Hong Kong’s Hang Seng index declined 2.2% to 16,721.69, and the Shanghai Composite index fell 0.5% to 3,019.47.
“The resilience of Asian equities is noteworthy, especially considering the stronger U.S. dollar and China’s ongoing deflationary challenges,” Stephen Innes, managing partner at SPI Asset Management, said in a commentary.
South Korea’s Kospi shed 0.9% to 2,681.82 after the Bank of Korea held its benchmark rate unchanged at 3.50%.
Australia’s S&P/ASX 200 lost 0.3% to 7,788.10.
In the bond market, the yield on the 10-year Treasury fell to 4.51% on Friday from 4.58% late Thursday.
Benchmark U.S. crude added $1.25 to $86.27 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, was $1.12 higher at $90.86 a barrel.
In currency trading, the dollar inched back to 153.11 Japanese yen, while the euro cost $1.0650, down from $1.0725.
On Thursday, a rally in the tech sector boosted markets. The S&P 500 rose 0.7% and the tech-heavy Nasdaq composite charged up by 1.7% to a record 16,442.20. The Dow Jones Industrial Average, which has less of an emphasis on tech, was the laggard. It slipped less than 0.1%.
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